Pasadena Mercantile Finance Corp. v. De Besa

Plaintiff brought the within action to recover the sum of $21,600 paid by plaintiff to defendants as fiscal agents for plaintiff in the sale of its capital stock. The plaintiff corporation was organized October 29, 1924, and the first sale of stock was made- about February 5, 1925. From the latter date until May 15, 1925, the defendants, together with one Hugh Kelley (these three owning a nominal amount of stock, which was all that had been issued), constituted the entire board of directors of plaintiff corporation. On May 15, 1925, a new board of directors was elected, defendants continuing to act as fiscal agents and continuing to sell stock under permit from the commissioner of corporations authorizing the payment of twenty per cent commissions.

At the time of the institution of the action an attachment was issued and levied upon property of the defendants, whereupon they filed with the sheriff a bond for the release of the attachment, signed by the interveners as sureties.

Findings of fact were made, from which the court made its conclusions of law to the effect (a) that plaintiff is entitled to judgment against defendants for the sum of $10,908.84, which included principal…

I concur in the judgment. The appeals are presented without any bill of exceptions, and therefore without any specification of errors, other than such specifications as may be found in the briefs.

In the very extensive opening brief on behalf of defendants, a reader may soon discover that defendants are intending to attack the court’s findings of fact, or some of them. For it is said, that “the judgment entered is not sustained by the evidence and is against the weight of the evidence”. Probably the writer of the brief intended to assert that the findings of fact (on which the judgment rests) are not sustained by the evidence, and are against the weight of the evidence. The findings of fact are contained in nineteen separate paragraphs. To which ones, and to what parts, of these nineteen paragraphs are defendants directing their objections? And as to which ones is it claimed that they are wholly without evidence to sustain them? If in reality, defendants are arguing only that they are against the weight of the evidence, then in that respect they are asking the court of appeal to determine facts by passing upon the merits of conflicting evidence. But the courts of appeal will not…

I concur in the affirmance of that part of the judgment only by which it was ordered “that the plaintiff take nothing as to the items of the claim sued upon subsequent to the 2nd day of May, 1925”. As to the conclusion reached by my associates regarding the remainder of the judgment of the lower court, I dissent.

First, I cannot agree that by its own minute record of a purported transaction which allegedly has occurred between the corporation and some other party, the corporation may in any manner support its cause of action. To my mind, such evidence is but self-serving, hearsay and incompetent.

Secondly, although I agree that ordinarily speaking, a director of a corporation legally should be regarded as a trustee for the corporation and the stockholders thereof, and consequently, in accordance with the well-established rule, may not, on behalf of the corporation, enter into binding contractual relations between it and himself; nevertheless, from a consideration of the authorities, I am convinced that such a contract is not void db initio, but, to the contrary, is merely voidable. In other words, any. contract between the corporation and one of its directors, however irregular…